6) When the last remnants of passionarity disappear, the Convolution Phase begins (according to Gumilev – «obscuration»). People with a complete lack of a progressive beginning strive to destroy not only passionaries, but also simple burghers – hardworking harmonious people. Sluggish and selfish people, guided by consumer psychology, dominate everywhere. «Though a day, yes mine! After us – even a flood! Pleasure is here and now!» – these are the slogans of this era. Corruption, compilation, mistrust and betrayal, ignorance and parasitism reign. An intelligent person who tries to maintain at least some order is perceived by the system as worse than an enemy. It is at this stage that a small detachment of barbarians is able to take possession of a huge city, mired in debauchery and indifference.
Table 2. Imperatives of behavior at different stages of the life cycle according to Gumilev
7) After they have eaten and drunk everything valuable that has been preserved from heroic times, the last stage begins – the Memorial Phase, when the system retains only the memory of its historical tradition. Then the memory also disappears, the time of balance with the environment comes, when people prefer philistine peace and measured existence to great plans. The despotism of Tradition, the authority of the Elders (age is the measure of everything, not talent or heroism), and an unchanging caste structure are established. Passionarity is only enough to maintain the economy established by the ancestors. Peace reigns until an external enemy destroys the system that has outlived itself, or a new community is born inside it, whose members will proclaim – «We are different! The old course of life must be broken,» and the old system no longer has the strength to destroy the new formation.
Company life cycle
Don’t you think that all this applies to companies as well? And the organizations where we, fortunately or unfortunately, have to get into, and the organizations in which we ourselves are the founders, just as accurately go through the same stages of their lives. And the rules adopted in them and the emerging relationships are very similarly transformed.
Dr. Ichak Kalderon Adizes is one of the unsurpassed business consultants in the world, a brilliant specialist in the field of effective business process management, he studied in detail the stages of the life cycle (LC) of the company. It is easy to see direct parallels between his description for companies with the characteristics of social systems by Gumilev.
Adizes about the life cycle of the company:
«The stages of Growth are the stages of sacrifice. Blossoming is a stage of existence. The stages of Aging are the stages of acquisition.»
Adizes’ characteristic of companies in the early stages of the Recession – he called it the" Aristocratic Stage»:
«The closer a company approaches the Aristocratic stage, the less desirable change becomes. The decrease in flexibility, which began even at the heyday stage, makes itself felt. In an effort to minimize all kinds of risks, the organization uses only those opportunities that give a tangible result in the short term. Yes, she does not master new technologies, does not show interest in the implementation of innovative projects, does not conquer new markets. In other words, she is losing the entrepreneurial spirit that propelled her to the pinnacle of success not too long ago.
Atmosphere of stagnation
What about people? They become passive. They try their best to avoid conflicts and disagreements. So, while the worker is quieter than water, lower than grass and does not actively try to raise existing issues that others prefer to turn a blind eye to, he has a chance not only to earn respect, but also to move up the career ladder. In turn, those who speak openly about the difficulties that have arisen receive a massive rebuff. He becomes an outcast in the team. And his most insignificant oversight becomes the reason for dismissal.
Rituals
In an aristocratic company, people attach great importance to rituals. They don’t care about the end result. Generally accepted standards and values come to the fore. Form beats function.
No more jeans and sweatshirts. There are strict requirements for the dress code, which even the most courageous democrat does not dare to violate. All managers wear one-piece corporate-colored business suits and look as if they were going to a funeral ceremony.
The main feature of aristocratic companies is a commitment not only to expensive uniformity
in clothes, but also to expensive surroundings. An office in the most prestigious area, elite massive furniture, chic carpets, paintings depicting the founder and expensive designer «tricks». Thus, by demonstrating their status, they identify their belonging to the elite.
Paralysis of the center of power
The top management of the company, who have fallen into the stage of Aristocracy, as a rule, becomes a victim of the former triumph that turned their heads. Instead of living in the present and looking to the future, leaders are still thrilled by old accomplishments. They imagine themselves to be omnipotent, although in fact their powers are limited. They are unable to quickly accept and implement any decision, since each of them needs to be coordinated with several centers of power.»
Practical complete coincidence with the characteristics of the Convolution (obscuration) phase by Gumilev, isn’t it?
Generalized change in the characteristics of the company by phases of the Adizes life cycle is shown in Table 3.
The company is a complex system. With its numerous subsystems, each of which is also subject to its own stages of development. They also have their ups and downs. And they can lead to the premature death of the entire organization. For example, childhood illnesses – growth difficulties that occur at the start of projects – are especially relevant for so-called «startups». To quote the descriptions of the «childhood diseases» of companies from Adizes:
«Premature aging
In the event that a manager with a dominant vitamin A – administration – wins, employees with entrepreneurial inclinations in droves begin to leave the organization.
Table 3. Characteristics of companies at different stages of the life cycle according to Adizes
The loss of the entrepreneurial component and the increased control on the part of the manager-administrator leads to a minimization of flexibility and, as a result, to premature bureaucratization. The company ceases to quickly adapt to the changing reality and is rapidly losing its leading position. She begins to age before she can reach her Prime.
Fig. 9. Typification of managerial styles according to Adizes
Unfulfilled entrepreneurship
Another scenario for the development of events: the owner understands that he can no longer and does not want to be a substitute player in the team. He decides to voluntarily give up power in order to leave and start from scratch.
He is often pushed to such a decision not only by the hired manager, but also by the board of directors.
The collapse of the business partnership
Another danger that lies in wait for the company in Youth is «divorce». If the company is headed by two founders who are carriers of different management styles, then it is during the Youth period that their partnership ends.»
Product life cycle
The ruthless picture of the life cycle can also be projected onto the results of a business project – its Product.
According to the marketing concept, any product goes through a life cycle, that is, there is a certain period of time when it is present on the market. In a typical product life cycle, the same main four phases, four stages are distinguished:
Bringing goods to market. First appearance of the product on the market. Characteristic is a small increase in sales volumes and, accordingly, the profit is minimal or non-existent.
Height. A period of rapid growth in sales volume if the product is accepted by the market and the demand for it increases. Profits also increase as sales increase.
Maturity. Sales volumes are significant, but further sales growth is not observed. Profit at this stage has stabilized, since additional costs are not required to bring the product to the market.
Decline, withdrawal from the market. This phase of the product life cycle is characterized by a significant decrease in sales volumes up to a complete drop in demand for this product. Profits plummet to zero.
The so-called BCG matrix is a tool for strategic analysis and planning in marketing. Created by the founder of the Boston Consulting Group (BCG) Bruce D. Henderson to analyze the relevance of the company’s products, based on their position in the market relative to the growth in demand for these products and the market share occupied by the company selected for analysis.
This matrix highlights four possible product roles for the company producing it, and the names of these roles themselves also indicate the «age character»:
«Question mark». Low market share, but high growth rates. The outlook is not clear.
«Stars». Under conditions of substantial investment, they show high sales growth and a high market share.
«Cash Cows». High market share but low sales growth.
«Dogs». The growth rate is low, the market share is low, the product is generally low profitability. Looking ahead, we note that, according to the BCG methodology, the only correct marketing strategy regarding «dogs» is the closure of such projects, the withdrawal of products from the market. Later, we will show examples of how just such a stagnant market, according to another taxonomy – «scarlet ocean», turns out to be fertile ground for the emergence of bifurcations – completely new, innovative business models.
System dictates
Now that there are clear parallels between the life stages of social systems of completely different kinds and their products, let us describe the very phenomenon of the life cycle in the universal language of synergetics. Hoping that this will help us reach the same universal rules of behavior within different systems – projects or companies.
If we introduce some action potential (we will not go into what physical meaning this value has), then during the life of the System, the potential from the zero level reaches a maximum at the break stage, and then drops to zero (the middle plot of Fig. 10).
Formation. The main direction at the stage is expansion. The system emerges, it needs to grow, expand, take shape – and this requires resources. Expansion for systems of various nature can be territorial or market. Capture, expansion, obtaining resources from outside. Expanding your living space is the main trend. The impulse of the development of the system is directed outward – capture, conquest, expansion. Growth of potential due to the extraction of resources around. Where else can a newborn get them from!
Peak – Expansion Momentum exhausted.